What AI bubble? Chipmaker TSMC earnings jump 35%

This AI is a fad that will soon blow over just like the smartphone and laptop. Personally, I write the Report on a 8.5" by 11" legal pad with a #2 pencil.

What AI bubble? Chipmaker TSMC earnings jump 35%

To keep up with the near-insatiable demand, TSMC plans to spend up to $56 billion this year on additional factories outside of Taiwan and in the U.S.

By Chris Morris, Quartz Media

Published 22 hours ago

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For the eighth quarter in a row, Taiwan Semiconductor Manufacturing Company is reporting year-over-year growth, as profits in the fourth quarter were up 35% amid continuing demand for artificial intelligence chips.

The world's largest contract chipmaker reported net income of $505.74 billion Taiwan dollars ($16 billion in U.S. dollars), versus expectations of $478.37. Revenues beat expectations as well, coming in at approximately $33.73 billion USD.

To keep up with the near-insatiable demand, TSMC says it plans to spend up to $56 billion this year on additional factories outside of Taiwan and in the U.S. Company management indicated it saw no near-term end to the good times, forecasting Q1 growth of 6.3% quarter over quarter. Demand remains strong for the company's 3nm and 5nm technologies, TSMC said. Year over year, 2026 sales are expected to increase 30% in USD.

CEO C.C. Wei, on an earnings call, said the decision to boost spending was made after check-ins with major customers (which include Nvidia $NVDA +2.13% and AMD +1.93%) and assessing current and projected future demand for AI chips.

“If we didn’t do it carefully…that would be a big disaster to TSMC,” he said.

Analysts cheered the results, saying TSMC remains in a dominant position, which should let it continue to capitalize on the AI boom.

"With TSMC firing on all cylinders, any competitive risk seemingly still years away (arguably the end of this decade at the earliest), and with the stock trading at a 30% discount to our PT (which could be construed as overly conservative) … the company remains one of our favorite names in hardware," wrote Wedbush in a note to investors.

TSMC, last March, struck a deal to invest a reported $100 billion in U.S. chip plants and packaging facilities. Months later the company saw its market cap top $1 trillion.

The company already has one factory in Arizona and is reportedly planning to build several new ones in that state as well to lessen the impact of tariffs.